The average age of retirement for American workers has been inching upwards over the last two decades as fewer people retire at the traditional age of 65. Data from the Bureau of Labor Statistics indicate that in the year 2000, only a quarter of all Americans aged 65 or older were working. Today, over one-third of those 65 or older are still in the labor force.
Next month’s Presidential election promises to be a polarizing event. The political right sees candidate Biden as a progressive socialist promoting social and economic policies that are harmful to economic growth. The left sees the incumbent Trump as an unprincipled crony-capitalist who is ignoring deteriorating social justice issues. Both sides are anxious about the implications of Biden’s proposed policies on the American economy and its social fabric. It is worth taking a quick look at the expected economic impacts of an aspirational Biden administration on American pocketbooks.
This economic body blow far surpasses the impact of the 2010 Great Recession
Brought about by the global financial crisis, the Great Recession pales in comparison. The Federal Reserve Bank noted that U.S. GDP shrank 4.3% from its peak in 2007 to its trough at the end of 2009. American unemployment during that time peaked at just under 11%.
Truth Be Told: We Still Know that We Do Not Know
Earlier this month, economists’ forecasts had called for a decline of 7.5 million in payrolls and a jump in the unemployment rate to 19%. No one in Bloomberg’s survey had projected improvement in either figure”.
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While the announcement is now focusing on the fact the Department of Labor has stated the identified unemployment rate drop for May from 14.7% to 13.3% is incorrect because of the difficulty in garnering true data during the pandemic, little is discussed about how the experts, whose sole job it is to predict the economy’s progress, could have been even more wrong than the numbers outlined by the DOL.
Given the fact that over 650,000 inmates are released back into our community each year and this number grows with the population growth, my involvement with claims involving individuals with previous prison time is becoming more frequent.
I recently was involved in a case concerning a male who was injured during his time of incarceration between the ages of 29 to 36. The claim from the plaintiff was his inability to participate in the labor force due to his injuries sustained while in prison. My counterpart projected the active remaining work years, had the accident never occurred, to age 65 upon his release from prison. My counterpart represented his post-incarceration earnings capacity would have been represented by entry-level trade work at an earnings level of $45,000 annually. The sum of these assumptions (if you were to believe to be accurate) would present a future earnings loss in the neighborhood of $1.2 million.
This is an essay written by my father, David Knowles, founder of The Knowles Group.
Teaching economics classes to MBA students required a certain style. They had just finished a day’s work downtown. The drive to the college after work may, for many, have been on their way home, and every night they had to make the decision to pull into the parking lot or to continue home to dinner and the kids. Classes were taught in rooms that were built for daytime, and my classroom boasted an entire wall of glass. While in the daytime this offered beautiful light, at night, students would shuffle in from the parking lot and see a large expanse of glassed darkness. They were there to listen to me teach economics which after a full day’s work can be quite challenging for many.
If you are on a sailboat for the first time in your life and the sea becomes rough, perspective is difficult to find. The boat rails under and waves are so treacherous that you are temporarily ensconced. You are cold, confused, and thoroughly frightened. Somehow, you survive. Your friend’s boat stays afloat. And you have stories to tell for years to come.
Historically, the holidays provide challenges. Friends and business acquaintances often get together and I find myself in foreign settings talking to people I barely know or do not know at all. While at a party I am asked what I do for a living; just a pleasant conversation-starter question. But the problem is, I must tell them, and once I tell them I am an economist or worse, a forensic economist, the glitter in their eyes subsides. They seek another face in the crowd, and a limp response ensues. Naturally, there are no follow-up questions for my answer.
Economic Damages: Work-life Expectancy v. Retirement Age Adding years onto the end of earnings loss calculations
Each month The Knowles Group will present a distinct economic component or inactive case highlights of a disputed variable in economic damage analysis.
Economists are tasked with determining work-life expectancy for the plaintiff in all matters concerning loss of earnings. When forensic economists are asked to forecast, we avoid speculation and reliance on plaintiff’s belief or intention. We instead lean on objective data in the form of historical indices and survey tables to help form assumptions about the future.
An interesting case example I faced recently included the assertion from my counterpart that the 60-year-old plaintiff working in the construction trades at the time of the incident would have continued to work until the age of 75 had the accident not occurred.
Welcome to The Knowles Group blog! Check back often for articles about forensic economics and litigation consulting. Have a question or want to get in touch about a case? Contact me.